Cabletron Systems Adjusts Acquisition-Related Charge for Digital's Network Products Business Acquisition.ROCHESTER Rochester (rŏch`ĕstər, –ĭstər). 1 City (1990 pop. 70,745), seat of Olmsted co., SE Minn.; inc. 1858. , N.H.--(BUSINESS WIRE)--Oct. 16, 1998--Cabletron Systems (NYSE NYSE See: New York Stock Exchange :CS) today announced that it has received a letter from the Securities and Exchange Commission commenting on accounting issues related to the Company's acquisitions of the Digital Network Products Business and Yago
Yet Another Gigabit Operation, an early LAN startup acquired by Cabletron Systems in the mid 1990's, fueling it's growth into Gigabit Ethernet switching and Systems, Inc. in the first quarter of fiscal 1999, as well as certain earlier acquisitions. The comments principally relate to the special charges the Company recorded in connection with these acquisitions and the amount of the purchase price in the Digital NPB NPB Non-Paying Bidder (eBay auctions) NPB Non-Paying Buyer (eBay) NPB Nippon Professional Baseball (Japan) NPB National Parole Board NPB National Pork Board and Yago acquisitions written-off by the Company as in-process research and development. The Company believes that these comments are similar to those made to a number of public companies, particularly in the high technology industry, that have reported acquisitions in the recent past. The accounting for these acquisitions was based upon consultation with its auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together and, with respect to in-process research and development, with an independent appraiser A person selected or appointed by a competent authority or an interested party to evaluate the financial worth of property. Appraisers are frequently appointed in probate and condemnation proceedings and are also used by banks and real estate concerns to determine the market , and was, the Company believes, consistent with industry practices. During the Company's fourth fiscal quarter ended February February: see month. 28, 1998, the Company recorded an acquisition-related charge of $57.7 million for the acquisition of the Digital NPB. As a result of further reviewing this charge with the Company's auditors, the Company has reduced the acquisition-related charge by $33.2 million. As a result of this reduction, (i) the Company's loss from operations for the first quarter of fiscal 1999 has been increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8.7 million of acquisition related expenses from the amount previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , and (ii) the Company's income from operations for the second quarter of fiscal 1999 has been decreased by approximately $5.0 million of acquisition related expenses from the amount previously disclosed. As a result, the loss for the first quarter will be increased by approximately $8.7 million ($5.8 million or $0.04 per share to ($158.1) million or ($0.97) per share, net of tax) and earnings per share for the second quarter will be reduced by approximately $5.0 million ($3.3 million or $0.02 per share to $11.3 million or $0.07 per share, net of tax). The Company expects that these adjustments will have the affect of increasing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. between $2 and $4 million in each of its next three quarters (beginning with the current third quarter). The adjustments above are reflected in the Company's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended August 31, 1998 filed today, which contains a more complete description of these and certain other adjustments and their potential impact. The Company has not yet submitted its response to the SEC. The SEC may seek additional adjustments of special charges related to these acquisitions. In addition the SEC may seek reductions in the amount of the purchase prices for these acquisitions allocated to in-process research and development. Any such further adjustments, together with the adjustments discussed above, may have a material adverse impact on the Company's operating expenses and earnings in future quarters. The Company intends, after reaching a final resolution with the SEC, to amend its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for fiscal 1998, its Form 10-Q for the first quarter of fiscal 1999 and possibly the Form 10-Q filed today for the second quarter to reflect the adjustments related to special charges described above and any additional adjustments required by the SEC, as well as make certain additional disclosures concerning in-process research and development write-offs. "These revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. and reclassifications are the result of a full review of the company's acquisition related charges with the company's auditors and other advisors," said David Kirkpatrick Kirk·pat·rick , Mount A mountain, 4,531.1 m (14,856 ft) high, of Antarctica near the edge of the Ross Ice Shelf. , Cabletron's corporate executive vice president of finance and chief financial officer. The attached schedules highlight the original and revised results for the second quarter of fiscal 1999 and for the first six months of fiscal 1999. About Cabletron (Cabletron Systems, Inc., Rochester, NH) A networking company founded in 1983 and separated into three companies in 2000: Enterasys Networks (www.enterasys.com) for enterprise class routers and switches, Riverstone Networks (www.riverstonenet. Cabletron Systems, a premier provider of enterprise-class networking solutions, enables dependable network access and communications for millions of people throughout the world under its Smart Networking architecture. With scaleable products designed for Fortune 1000 enterprise networks, service providers and small businesses, Cabletron provides simple, reliable, and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. business solutions for the information age. The statements in this press release regarding future events or results constitute forward looking information, and actual results could differ materially. Among the factors that could cause actual results to differ are competitive conditions, the adverse margin impact of competition and lower margin reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. sales, difficulties in assimilating as·sim·i·late v. as·sim·i·lat·ed, as·sim·i·lat·ing, as·sim·i·lates v.tr. 1. Physiology a. To consume and incorporate (nutrients) into the body after digestion. b. the operations, technologies and products of recently acquired companies, risks of entering new markets and distribution channels, and changes in overall demand levels for computer networking
Computer networking is the engineering discipline concerned with communication between computer systems or devices. products. For a more detailed discussion of the risks and uncertainties related to the Company's business, please refer to the company's Annual Report on Form 10-K for fiscal 1998 filed on May 29, 1998. -0-
CABLETRON SYSTEMS, INC.
Consolidated Condensed Statements of Operations
(three months and six months ended August 31, 1998)
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
August 31, 1998 August 31, 1998
Previously Previously
Reported Revised Reported Revised
Net sales $370,591 $370,591 $736,338 $736,338
Cost of sales 195,000 195,000 404,562 421,112
Gross profit 175,591 175,591 331,776 315,226
Operating expenses:
R & D 53,941 53,941 108,150 108,149
S G & A 103,513 108,511 200,255 210,988
Special Charges -- -- 163,550 150,000
Operating income (loss) 18,137 13,139 (140,179) (153,911)
Interest income 4,081 4,081 7,920 7,920
Income (loss) from
operations before
income taxes 22,218 17,220 (132,259) (145,991)
Income tax expense 7,576 5,877 5,399 716
Net income (loss) $ 14,642 $ 11,343 ($137,658) ($146,707)
Earnings (loss)
per share $ 0.09 $ 0.07 ($ 0.84) ($ 0.89)
Weighted average
number of common
shares outstanding 170,462 170,462 164,017 164,017
CABLETRON SYSTEMS, INC.
Consolidated Condensed Balance Sheets
(August 31, 1998 and February 28, 1998)
(in thousands)
(unaudited)
August 31, 1998
Previously Feb. 28,
Reported Revised 1998
Assets
Cash & short-term investments $ 259,519 $ 259,519 $ 324,057
Accounts receivable (net) 260,534 260,534 241,181
Inventories 258,715 258,715 309,667
Deferred income taxes 78,047 71,997 81,161
Other assets 74,501 109,295 78,084
Total current assets 931,316 960,060 1,034,150
Investments 164,489 164,489 123,272
Property, plant & equipment
(net) 238,954 238,954 244,730
Intangible assets 49,845 49,845 36,867
Deferred income taxes 155,788 155,788 167,308
Total assets $1,540,392 $1,569,136 $1,606,327
Liabilities & Stockholders'
Equity
Accounts payable $ 100,039 $ 100,039 $ 79,969
Other current liabilities 420,407 437,325 392,781
Total current liabilities 520,446 537,364 472,750
Long term obligations -- -- 144,557
Total liabilities 520,446 537,364 617,307
Stockholders' equity 1,019,946 1,031,772 989,020
Total liabilities &
stockholders' equity $1,540,392 $1,569,136 $1,606,327
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion